Data Sheet—Apple and Goldman Sachs Make an Unlikely Team

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In the same way China innovation was a recurring theme for me in 2017, I’m seeing that business reinvention is a subject I’m going to come back to repeatedly this year.

When Apple reported better-than-expected earnings recently, reinvention was the key. Services, as opposed to devices or software, increasingly are becoming a larger percentage of the consumer technology giant’s revenues. Thursday The Wall Street Journal published an impressively comprehensive article detailing an imminent tie-up on credit cards, of all things, between Apple and blue-chip investment bank Goldman Sachs.

It’s a story of reinvention for both.

For Apple, payments are part of its services story. Apple Pay is leap-ahead technology that turns a phone into a credit card. Apple is plugging away at the market, more like the way the iPod and iPhone ramped—in other words, slowly. (Samsung, Google and others are in the electronic “wallet” dodge too.) Apple’s payments ambitions are of a piece with its music and app sales and subscriptions business: Charging a few cents or a few dollars to the owners of each of its billion-plus devices is a large opportunity.

Goldman, too, is reinventing. In the financial crisis it became a bank, in part because regulators forced it to. Now it’s really behaving like one, offering consumer banking services through its Marcus brand, a nod to its founder, Marcus Goldman. (Reinventing while being mindful of history makes for elegant branding.)

If Goldman and Apple aren’t obvious partners in offering credit cards, what they share is pedigree, wealth, and a clearly demonstrated appetite for change.

Incidentally, there’s a connection to China innovation here too. The two biggest digital payments players in China are Alibaba, whose Ant Financial affiliate owns Alipay, and game-and-messaging giant Tencent, whose WeChat Pay has been coming on strong due to the ubiquity of WeChat itself. The advent of the credit card revolutionized consumer behavior in the west but didn’t eliminate cash. China’s innovative approach has taken things to another level, making cash all but obsolete for a large chunk of the population.

So far those worlds haven’t intersected much. The rules of reinvention suggest eventually they will.

NEWSWORTHY

Free as in beer. Free stock trading app Robinhoodraised $363 million of venture capital in a deal that valued the company at $5.6 billion, more than four times what it was worth when it last raised money a year ago. The company is adding free digital currency trading to its app. “We expect by the end of the year to be either the largest or one of the largest crypto platforms out there,” co-CEO Baiju Bhatt tells Fortune.

Kinda not quite there yet. On Wall Street, graphic chip leader Nvidiafailed to impress even though its revenue jumped 66% to $3.2 billion, more than analysts expected, and net income more than doubled to $1.98 per share. But the company also said volatile buying from digital currency miners was likely to fall, sending its shares down 2% in premarket trading on Friday. Dropbox slightly exceeded expectations, with revenue growing 28% to $316 million and the number of paying users growing 24% to 11.5 million. Its shares were also down 2%.

Heavy metal. The smelting of aluminum is not an environmentally friendly process, not by a long shot. So Apple is getting together with two suppliers, Alcoa and Rio Tinto, in a venture called Elysis to push a new process that eliminates greenhouse gas emissions from the smelting. Apple is throwing in $10 million but won’t get an equity stake. The metal companies are investing $43 million and the Canadian and Quebec government are each investing $47 million.

Banner year. The market for online advertising grew 21% last year to $88 billion, according to IAB. Search ads increased 18% to $40.6 billion, banner ads rose 23% to $27.5 billion, and video ads jumped 33% to $11.9 billion. Social ads (across all three formats) grew 36% hitting $22.2 billion. While digital ad sales squeaked by TV ad sales in 2016, last year they decisively exceeded TV by $18 billion.

Open the pod bay doors. Deputy U.S. Chief Technology Officer Michael Kratsios announced on Thursday that the White House is creating an artificial intelligence task force, consisting of officials from a variety of government agencies like the National Science Foundation and the Defense Advanced Research Projects Agency. “We cannot be passive. To realize the full potential of AI for the American people, it will require the combined efforts of industry, academia, and government,” Kratsios said at an AI summit.

What’s your major. Speaking of AI, Carnegie Mellon announced it would offer degrees in artificial intelligence from its computer science school, the first such AI degree program in the country. “Specialists in artificial intelligence have never been more important, in shorter supply or in greater demand by employers,” Andrew Moore, the school’s dean, said.

Truthiness. Remember back in December, the day after the Federal Communications Commission voted to repeal its net neutrality rules, when chairman Ajit Pai went on television and said: “Those who have said the Internet as we know it is about to end have been proven wrong starting this morning”? Well, on Thursday, the FCC finally filed the paperwork to repeal the rules effective June 11. In other words, the protective rules were–and still are–in effect.

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FOR YOUR WEEKEND READING PLEASURE

A few interesting longer reads I came across that are suitable for your weekend reading pleasure.

I Played Fortnite and Figured Out the Universe (The Atlantic) There’s another great exception to Fortnite’s zero-sum game. Hidden around the island, there are dance floors, the lights still flashing and the music still oonce-oonce-ooncing amidst the desolation, and it is well-established that the dance floors are DMZs. This isn’t a rule of the game; as far as Fortnite’s code is concerned, a discotheque is as good a place for blasting as a dry creek bed. But the players disagree. If a renegade dares turn against the crowd, the crowd teams up against them, then returns to its revels.

And for His Next Act, Ev Williams Will Fix the Internet (New York Times) Mr. Williams has not given up on Twitter, his biggest and most influential project thus far. (He left the company in 2011, but has stayed on the board and remains a major shareholder.) He still believes that, on balance, a world with social media is better than one without. But a year ago, he began lamenting that the internet was “broken”—an observation that has been borne out by, well, basically everything that has happened since. “I think I was a little bit ahead of some people in seeing the dark side,” Mr. Williams told me recently.

The Tiny Island With Human-Sized Money (BBC) Arriving on the tiny Micronesian island of Yap will fill even the most jaded traveller with a sense of awe. The single daily flight comes in over dense forests, taro swamp, shallow lagoons and a web of mangroves, all surrounded by fringing reef. But the real wonderment doesn’t come from the idyllic scenery, nor from the greeting by a Yapese girl in a traditional hibiscus skirt. It’s when you first come face-to-face with a piece of giant stone money. Hundreds of these extraordinary, human-sized discs of rock are scattered all over the island; some outside the island’s few hotels, others in rows close to the beach or deep in the forests. Each village even has a stone money bank where pieces that are too heavy to move are displayed on the malal (dancing grounds).

Inside the Secret Cities That Created the Atomic Bomb (Citylab) They held laboratories and sprawling industrial plants, but also residential neighborhoods, schools, churches, and stores—war workers had personal lives and families, after all. At their peak in 1945, the three cities had a combined population of more than 125,000. Their research facilities later morphed into national laboratories. But during the war, none of the cities appeared on any maps: They were the top-secret centers of the Manhattan Project, the U.S. military’s initiative to develop nuclear weapons before the Nazis got there first.

FOOD FOR THOUGHT

Google’s Android software rules the world, running on 85% of all smartphones. But Android’s app ecosystem doesn’t have the same panache as Apple’s iOS app universe, and many top apps start on the iPhone before coming to Android. Google has long struggled to get developers on board with its design guidelines, known as “Material Design.” So in its latest revision, instead of just dictating what apps should look like, Google is building tools to help developers customize their logos and brand styles for Android. In a long profile of Google’s efforts to make Android and its apps look better, The Verge reporter Dieter Bohn explains:

Rachel Been, the design lead for the new Material Design, says that the tools for creating design systems based on Material are just as important as the core design guidelines themselves — if not more so. “We had to create the full infrastructure,” she says. So there are palette tools and font tools to help designers create a version of Material Design that feels native to their brand but also comprehensible to users.

”We like to talk about it as infinite possibilities, with guardrails,” Been says. “We still had those inherent building blocks of usability. Where a button really still maintains the usability and understandability of a button.” But now, that button (in Android parlance, it’s often a “Floating Action Button,” or FAB) can be more than a floating circle. Lyft, for example, now uses a longer lozenge-shaped button, but it still feels like a native Android app.

BEFORE YOU GO

Thursday marked the wedding of one of the great fictional nerds of all time, Dr. Sheldon Cooper of CBS’s hit comedy The Big Bang Theory. Actress Mayim Bialik, who played bride Amy Farrah Fowler, is wondering how fans and critics will react to her character’s unusual wedding dress choice: “It’s safe to say I’m glad it’s over, and I’m ready to move on into the next thing.”